SUGGESTED  PROBLEMS 
FOR  TEACHERS 


FOR  USE  WITH 


ELEMENTARY  PRINCIPLES 
OF  ECONOMICS 


BY 

IRVING   FISHER 

Professor  of  Political  Economy,  Yale  University 


¥nrfe 
THE  MACMILLAN  COMPANY 

LONDON:   MACMILLAN  &  CO.,  LTD. 
1912 


By  Professor  IRVING   FISHER 

Elementary  Principles 

of  Econoi 


Cloth,  12mo.     $2.00  net 

THE  words  "  Elementary  Principles"  in  the  title  of  this  book  in 
limits  of  its  scope  ;  the  book  is  intended  to  be  elementary,  not  i 
and  concerns  itself  with  economic  principles,  not  their  applications. 

First,  being  elementary,  it  does  not  attempt  to  unravel  the  mo: 
tangles,  of  economic  theory  or  to  introduce  controversial  matter. 
Secondly,  being  devoted  to  principles,  the  book  is  confined  to  th; 
aspect  of  economics  which  is  now  coming  to  be  recognized  as  capable 
tific  treatment  in  the  sense,  for  instance,  in  which  that  term  may  be  f 
physics  or  biology.  .  .  .  The  aim  of  this  book  is  to  formulate  so 
fundamental  principles  relating  to  economics.  ...  It  takes  du 
of  those  ideas  with  which  the  student's  mind  is  already  furnished,  ai 
on  and  transforms  these  ideas  in  a  manner  adapted  to  the  mind  contain 
This  is  especially  needful  where  the  ideas  are  apt  to  be  fallacious, 
nomic  ideas  most  familiar  to  those  first  approaching  the  study  of  e 
concern  money,  —  personal  pocket  money  and  bank  accounts  hous 
penses  and  income,  the  fortunes  of  the  rich.  Moreover,  these  ideas  ai 
fallacious.  Therefore,  the  subject  of  money  is  introduced  early  in 
and  recurred  to  continually  as  each  new  branch  of  the  study  is  • 
For  the  same  reason  considerable  attention  in  given  to  cash  accoun 
to  those  fundamental  but  neglected  principles  of  economics  which 
accounting  in  general.  Every  student  at  first  is  a  natural  "mercantil 
every  teacher  has  to  cope  eventually  with  the  prejudices  and  misco 
which  result  from  this  fact.  Yet  no  textbook  has  apparently  attempted 
these  difficulties  at  the  point  where  they  are  first  encountered,  which 
beginning. 


PUBLISHED  BY 

THE  MACMILLAN  COMPAN 

64-66  Fifth  Avenue  NEW  ' 


SUGGESTED  PROBLEMS 
FOR  TEACHERS 


FOR  USE  WITH 


ELEMENTARY   PRINCIPLES 
OF  ECONOMICS 


BY 

IRVING    FISHER 

Professor  of  Political  Economy,  Yale  University 


¥0rfe 
THE   MACMILLAN   COMPANY 

LONDON:    MACMILLAN  &  CO.,  LTD. 
1912 


COPYRIGHT  1912 
BY  THE  MACMILLAN  COMPANY 


Set  up  and  printed  from  type.     Published  October,  1912 


PRESS  OF 

THE  NEW  ERA  PRINTING  COMPANY 
LANCASTER.  PA. 


PREFACE 

These  problems  aim  to  test  and  strengthen  the  student's 
knowledge  of  the  Elementary  Principles  of  Economics. 
For  this  purpose  care  has  been  taken  to  make  them  as 
definite  as  possible.  The  vague  problems  common  to  most 
textbooks  have  been  studiously  avoided,  in  the  belief  that 
they  encourage  mere  expression  of  opinion  by  the  student 
instead  of  an  effort  at  careful  and  exact  thinking. 

The  problems  may  either  be  assigned  in  advance,  to  be 
prepared  by  the  student  out  of  the  classroom,  or  may  be 
discussed,  without  previous  preparation,  in  the  classroom. 
I  am  inclined  to  think  that,  in  general,  the  best  arrangement 
is  to  assign,  for  outside  work,  the  more  difficult  problems  as 
"  optionals,"  giving  special  credit  for  their  correct  solutions, 
and  to  reserve  the  simpler  problems  for  impromptu  dis- 
cussion in  the  classroom.  By  such  a  discussion  it  is  easy 
to  capture  the  attention  and  interest  of  many  students 
who  would  endeavor,  out  of  the  classroom,  to  shirk  the 
task  of  independent  thinking. 

For  extemporary  work  I  believe  the  best  results  will  be 
secured  by  holding  the  student  responsible  for  the  correct 
solution  of  the  simpler  problems.  They  then  serve  as  a 
severe  test  of  knowledge  of  the  text.  When  the  student 
once  understands  that  he  must  be  ready  to  solve  such 
problems  at  sight  he  will  be  stimulated  to  study  the  text- 
book not  with  the  object  of  memorizing  the  words  or  reciting 
in  a  parrot-like  way  but  in  order  to  obtain  such  a  sure  grasp 
and  mastery  of  the  subject  as  will  enable  him  to  recognize 
and  apply  the  principles  involved  in  the  many  aspects  and 
disguises  in  which  they  appear  in  the  problems. 

It  was  to  enable  the  teacher  to  give  his  students  such 
'.'  sight  work  "  that  these  problems  were  collected  in  a 
separate  pamphlet  and  not  printed  in  the  textbook  itself. 

The  problems  are  framed  so  as  to  suggest  to  the  teacher 
many  other  similar  ones  to  be  constantly  varied  and  adapted 

iii 

259807 


IV  PREFACE. 

to  local  circumstances,  current  topics  and  particular  ques- 
tions introduced  from  time  to  time  by  the  students  them- 
selves. Blank  pages  have  been  provided  in  order  to  enable 
the  teacher  to  jot  down  such  additional  problems.  (I 
should  be  greatly  obliged  if  teachers  would  send  me  such 
new  problems, — for  instance  by  lending  me  their  annotated 
copies  of  this  pamphlet.)  The  pamphlet  should  thus  serve 
as  a  mere  source  book  or  note  book,  the  problems  themselves 
being  constantly  changed  and  never  allowed  to  become 
stale  or  stereotyped.  This  is  another  reason  why  a  separate 
pamphlet  was  preferred  to  problems  printed  in  the  textbook 
itself.  Such  problems  soon  become  stale  to  the  teacher, 
from  yearly  repetition,  and  to  the  student,  from  loss  of 
applicability  to  current  events.  They  are  also  apt  to  lose 
even  their  character  as  problems;  for  their  solutions  often 
become  matters  of  record  in  second-hand  editions  of  the 
textbook  and  in  "  digests  "  or  "  keys  "  prepared  by  enter- 
prising students  for  their  fellows. 

I  am  indebted  to  various  collections  of  problems,  in- 
cluding the  late  Professor  William  G.  Summer's  Problems 
in  Political  Economy,  New  York  (Henry  Holt),  1888, 
Professor  Frank  A.  Fetter's  Principles  of  Economics, 
New  York  (The  Century  Company),  1904,  Professor  H.  J. 
Davenport's  Exercises  in  Value  Theory,  Chicago  (Univer- 
sity of  Chicago  Press),  1908,  Outlines  of  Economics,  by 
members  of  the  Department  of  Political  Economy  of  the 
University  of  Chicago  (University  of  Chicago  Press), 
1910,  and  Professor  F.  M.  Taylor's  Principles  of  Economics, 
University  of  Michigan,  Ann  Arbor,  Michigan,  1911.  I 
have  indicated  these  sources  by  the  initial  letters  S,  F,  D, 
O,  T,  respectively. 

I  am  still  more  indebted  for  suggestions  and  criticisms 
to  my  colleagues:  Professor  Clive  Day  and  Assistant  Pro- 
fessor F.  R.  Fairchild  and  to  some  of  my  graduate  students, 
especially  Mr.  J.  M.  Shortliffe,  Mr.  Alden  Anderson  and 
Mr.  Ray  B.  Westerfield,  IRVING  FISHER. 

August,  1912. 


SUGGESTED  PROBLEMS  FOR  TEACHERS 


Ch.  I.     §  i 

Is  air  under  ordinary  conditions  wealth? 

Is  the  air  in  a  hot  house  wealth? 

Is  the  air  confined  in  a  diving  bell  wealth;  in  one's  nostrils; 

lungs;  in  a  pneumatic  tire? 
Is  the  water  flowing  from  a  spring  by  the  roadside  wealth? 

(r.) 

Is  a  cup  of  water  taken  from  the  spring  wealth?     (T.) 
Are   fish  wealth;  all   fish?     If  not,  distinguish  which  are 

and  which  are  not. 
Is  a  domesticated  dog  wealth;  a  wild  animal  in  the  jungle; 

in  a  menagerie? 

Is  an  autograph  of  Benjamin  Franklin  wealth? 
Are  the  following  wealth :  an  ocean  steamship ;  a  ship  on  the 

bottom  of  the  ocean;  gold  in  a  mine;  gold  in  the  moon; 

gold,  to  a  shipwrecked  sailor  on  a  desert  island;  gold  in 

teeth;  false  teeth;  natural  teeth;  health;  eye-sight;  an 

amiable  disposition;  a  waterfall;  a  head  full  of  useful 

knowledge?     (0.) 

Ch.  I.     §  2 

It  is  said  that  many  Chinamen  come  to  the  United  States, 
make  money  and  return  to  China  with  it.  Do  you 
think  this  tends  to  impoverish  the  United  States? 

[For  other  questions  on  money  fallacies  see   Chapter 
XIV,  end.] 

Ch.  I.     §  3 

Classify,  under  the  scheme  of  Chapter  I,  §  3,  the  following 
articles  of  wealth:  iron  ore,  Brooklyn  Bridge,  Yellow- 


2          SUGGESTED  PROBLEMS  FOR  TEACHERS 

stone  Park,  toll-gate,  a  city  lot,  a  railway  station,  track, 
fence,  flax,  bread,  canned  goods,  play  ground,  growing 
corn,  axe,  thread,  locomotive,  slave,  cash-book,  money 
metal,  money,  battleship,  baseball. 

Is  a  serf  wealth;  an  indentured  servant;  a  negro  held  in 
peonage;  a  laborer? 

Divide  wealth  into  two  classes  according  to  its  origin  5 
according  to  its  relation  to  the  consumer;  according  to 
its  being  traded  in;  according  to  durability;  according 
to  the  uses  to  which  it  is  put;  according  to  its  bulk; 
according  to  its  importance  to  the  welfare  of  a  nation; 
according  to  its  age;  according  to  any  other  principle 
of  classification  which  occurs  to  you. 

Ch.  I.     §  4 

With  what  unit  would  you  measure  the  following  articles 
of  wealth:  slaves,  carpet,  gold,  diamonds,  champagne, 
wheat,  wheat  land,  growing- wheat,  plants,  horses,  oil? 

How  would  you  measure  the  quantity  of  wealth  in  your 
room?  Would  one  unit  suffice?  If  not,  how  many? 
Make  a  rough  inventory.  If  you  wished  to  be  very 
exact,  would  you  need  to  employ  a  greater  number  of 
units?  If  so,  would  these  units  have  to  be  more  care- 
fully characterized  than  in  the  rough  measurement? 

Ch.  I.     §  5 

How  would  you  attempt  to  ascertain  the  price  of  sugar; 
unclaimed  umbrellas  left  at  a  railway  lost-property 
office;  unredeemed  diamonds  in  a  pawn  shop;  building 
land  in  a  city;  land  in  a  public  park;  houses  in  a  row,  all 
alike;  the  White  House;  sail  boats;  the  Olympic;  battle- 
ships? 

If  a  bicycle  is  stolen  and  never  recovered,  in  what  sense 
does  it  belong  to  the  thief?  De  jure?  De  facto?  If  it 
is  sold  by  the  thief  and  bought  by  an  innocent  purchaser, 


3         SUGGESTED  PROBLEMS  FOR  TEACHERS 

does  it  belong  to  the  new  owner  de  jure  as  well  as  de 
facto?  Do  you  suppose  much  of  the  land  and  other 
articles  of  wealth  now  in  existence  was,  in  the  course  of 
its  previous  history,  stolen  or  otherwise  wrongfully 
acquired  ? 

Ch.  I.     §  6 

If  a  quantity  of  243  bushels  of  wheat  is  sold  at  a  price  of 

$1.10  per  bushel,  what  is  the  value? 
If  an  appraiser  puts  a  value  of  $10,000  on  a  250  acre  farm, 

what  price  does  this  represent? 
If  sugar  to  the  value  of  a  dollar's  worth  is  bought  at  a  price 

of  seven  cents  a  pound,  what  is  its  quantity? 

Ch.  I.     §  7 

A  man  died  leaving  an  estate  which  his  adminsitrators 
inventoried  at  the  following  valuations: 

Residence $10,000 

10  R.  R.  bonds  at  $1015 10,150 

Cash 123.16 

Total $20,273.16 

The  appraisers  say  that  the  residence  may  be  worth  a 
thousand  or  two  more  or  less  than  the  figure  ($10,000) 
at  which  it  is  entered.  The  price  of  the  railway  bonds  is 
known  to  be  correct  within  $5,  while  the  cash  is  absolutely 
correct.  How  accurate  is  the  total,  $20,273.16? 


Ch.  II.     §  i 

What  benefit  is  rendered  by  a  bushel  of  wheat;  a  sack 
of  flour;  a  loaf  of  bread? 

What  benefit  is  rendered  by  a  furnace;  a  ton  of  coal;  a 
heating  register;  a  thermostat;  a  storm  window;  a 
policeman;  a  lawyer;  a  judge;  a  teacher;  a  clergyman? 


4         SUGGESTED  PROBLEMS  FOR  TEACHERS 

Ch.  II.     §  2 

What  costs,  if  any,  are  there  in  getting  water  from  a  spring? 
What  costs  at  first  in  getting  water  from  a  proposed 
new  municipal  water  system?  From  this  system  after 
it  is  built?  What  costs  to  the  user  of  water  who  draws 
it  from  a  faucet?  Any  cost  to  him  in  money? 

Ch.  II.     §  3 

Make  a  diagram  to  show  the  interest  which  a  tenant  has 
who  has  leased  a  building  for  five  years,  occupancy  to 
begin  six  months  from  date. 

Make  a  diagram  to  show  the  interest  which  the  owner  of  a 
"  season  ticket  "  to  the  opera  has. 

If  an  ocean  steamship  company  brings  an  immigrant  to 
America  under  an  agreement  by  which  he  is  to  pay  for 
his  passage  out  of  future  earnings,  does  the  company 
partially  own  the  immigrant? 

What  is  selling  one's  self  into  slavery?  If  a  man  is  hired 
by  the  day,  how  much  of  a  claim  has  his  employer  on 
him?  How  much  has  he  on  his  employer? 

Benefits  are  classified  as  past  and  future.  Why  not  make 
a  third  class  of  u  present  "? 

Suppose  a  case  where  a  railway  company  pays  its  president 
$200,000  in  return  for  which,  without  further  compen- 
sation, the  president  agrees  to  work  ten  years.  To 
what  extent  does  the  railway  company  own  the  president? 

If,  instead,  he  is  paid  a  salary  of  $25,000  a  year,  state  the 
claims  and  counterclaims  involved. 

When  a  professional  baseball  player  is  "  sold  "  for  a  par- 
ticular ball  nine,  what  is  the  nature  of  the  transaction? 

When  a  voter  sells  his  vote,  to  what  extent  is  he  owned  by 
another? 

Ch.  II.     §  4 

A  buys  a  typewriter  from  X,  paying  cash  £100.  B  rents 
the  typewriter  from  A  for  one  month.  During  the 


5         SUGGESTED  PROBLEMS  FOR  TEACHERS 

month  C  occasionally  hires  the  typewriter  from  B  for 
an  hour  at  a  time.  Explain,  using  diagram,  the  property 
right  of  A,  B,  and  C,  each,  in  the  typewriter. 

A  buys  a  ticket  for  a  trip  to  Europe  on  the  "  Olympic." 
What  (if  any)  in  this  case  constitutes  wealth;  services; 
property;  certificate  of  property  right;  cost? 

If  you  buy  a  ticket  to  a  football  game,  what  property  right 
do  you  acquire?  What  is  its  evidence?  To  what  benefits 
does  it  entitle  you?  What  articles  of  wealth  yield  these 
benefits? 

It  is  sometimes  said  that  a  man  who  promises  to  deliver 
in  the  future  what  does  not  yet  exist,  has  nothing  behind 
his  promise.  Is  this  true  (a)  if  he  is  "  good  "  for  his 
promise;  (b)  if  not?  Suppose  wheat  is  the  wealth  in 
which  the  promissor  is  to  make  good  his  promise.  Is  it 
the  future  object,  or  is  it  something  in  the  present? 
If  so,  what? 

In  the  safes  of  lower  Manhattan  are  concentrated  millions 
of  stocks  and  bonds;  does  this  fact  increase  the  wealth 
of  lower  Manhattan?  By  the  amount  of  the  stocks' 
and  bonds'  par  value?  Market  value?  By  how  much 
and  why? 

A  canal  has  become  inadequate  for  demands  made  by  traffic. 
Agitation  is  started  for  the  improvement  of  the  canal. 
A  railway  corporation,  fearing  competition  if  the  canal 
is  improved,  buys  it,  the  purpose  being  to  allow  the  canal 
to  fall  into  disuse.  No  income  will  be  derived  from  the 
canal.  In  order  to  raise  the  necessary  funds,  a  bond  issue 
is  floated.  What  is  the  wealth  underlying  the  bonds? 

Sometimes  "  subscription  books  "  are  subscribed  for  in 
advance  of  being  published  or  even  written. 

Suppose  the  subscription  is  not  prepaid,  but  is  to  be  paid 
on  delivery  of  the  book;  what  claim  then  has  the  book 
company  on  the  subscriber? 

In  what  way,  if  at  all,  will  the  case  be  different  if  an  agent 
of  a  magazine  secures  subscriptions  to  take  the  magazine 


6         SUGGESTED  PROBLEMS  FOR  TEACHERS 

and  pay  for  it  when  the  bill  is  presented.     If  the  promise 
is  not  written,  in  what  way  will  the  case  be  different? 

In  what  way  will  the  case  be  different  if  next  year  the  sub- 
scriber refuses  to  make  an  absolute  promise  to  renew 
his  subscription,  but  gives  assurance  that  he  probably 
will  do  so? 

In  what  way  will  the  case  be  different  if  no  assurance  is 
asked,  but  the  publisher  of  the  magazine  relies  merely 
on  past  experience  and  counts  on  the  renewals  from  three- 
fourths  of  his  subscribers?  What  is  the  nature  of  this 
property-right?  If  he  sells  his  newspaper,  including 
rights  to  probable  renewals,  what  are  these  rights  called? 
Are  they  "  good  will  "? 

Show  the  relation  of  good  will  to  promises. 

[A  similar  series  of  questions  may  be  asked  with  reference 
to  patent  rights  and  other  obscure  cases  of  property, 
seemingly  independent  of  wealth.  See  Nature  of 
Capital  and  Income,  Chapter  II.] 

Ch.  II.     §  5 

Classify,  the  following  under  wealth,  property,  certificates, 
services,  qualities  of  wealth,  or  non-economic  elements: 
The  overtures  performed  by  an  orchestra;  the  overture 
as  a  composition  (Is  it  an  economic  magnitude?);  the 
overture  as  a  printed  musical  score;  a  baseball  game;  a 
whiff  of  fragrance  from  a  buttonhole  bouquet ;  the  ribbon 
of  the  Legion  of  Honor;  a  Ph.D.  degree;  a  union  label; 
a  trademark;  the  electric  current  through  a  wire;  a 
liquor  license;  political  "influence"  with  a  legislature; 
a  trade  secret;  a  police  permit  to  pick  pockets?  What  is 
obtained  in  return  for  a  nickle  dropped  in  the  slot  of  a 
weighing  machine? 

Ch.  II.    §  6 

Suppose  a  farm  worth  #10,000  is  mortgaged  for  #6,000. 
If  the  mortgage  is  taxed,  ought  the  farm  to  be  taxed  too, 
and  if  so,  how? 


7         SUGGESTED  PROBLEMS  FOR  TEACHERS 

ch.  m.   §  i 

Are  wages  a  stock  or  a  flow? 

Is  a  moving  picture  exhibition  capital  or  income? 

Are  the  films  capital  or  income? 

Ch.  III.     §  2 

A  student  owns  books  worth  #100;  clothes,  #100;  furniture, 

#50;  typewriter,   #75;  bank  account,   #200;  cash,   #25; 

ticket  to  a  ball  game,  $2.     He  owes  Farmer  Jones  $30; 

the  tailor  #40;  and  the  typewriter  dealer  #35.     Make  up 

the  student's  capital  account. 
If,  immediately  after  the  last  balance  sheet  in  Ch.  Ill, 

§  2,  is  made  up,  a  dividend  of  10%  (on  the  original  capital) 

is  paid,  show  how  the  assets  and  liability  items  will  be 

affected. 

Ch.  III.     §  3 

Make  out  an  imaginary  balance  sheet  for  two  dates,  showing 
a  growth  of  capital-balance  and  indicating  the  under- 
valuations in  certain  specific  items  of  assets  to  explain 
the  discrepancy  between  the  bookkeeper's  and  the  market 
valuation. 

Ch.  III.     §  4 

Suppose  among  the  assets  of  a  concern  is  a  note  for  #10,000 
of  a  bankrupt  who  can  pay  only  40  cents  on  the  dollar. 
Show  what  changes  should  on  this  account  be  made  in  the 
balance  sheet. 

Ch.  III.     §  5 

Suppose  the  person  whose  balance  sheet  we  are  considering 
himself  fails  and  can  only  pay  75  cents  on  the  dollar. 
What  effect  will  this  have  on  the  valuation  put  on  his 
debts?  Illustrate,  by  figures,  the  change  produced  in 
the  balance  sheet. 


8          SUGGESTED  PROBLEMS  FOR  TEACHERS 

Ch.  III.     §  6 

Make  up  an  imaginary  balance  sheet  of  a  joint  stock  com- 
pany. What  difference,  if  any,  would  it  make  whether 
the  company  be  regarded  as  consisting  of  its  stock- 
holders or  as  a  fictitious  entity  owing  the  stockholders? 

Ch.  III.     §  7 

Make  up  the  capital  account  for  each  of  the  following 

persons,  and  combine  them  by  the  method  of  balances 

and  by  the  method  of  couples: 

(a)  Smith  owns  a  farm  worth  $10,000;  cattle  and  horses, 
etc.,  $1000;  machinery,  $1500;  buildings  and  im- 
provements, $5000;  railway  shares.  $500;  Brown's 
note,  $500.  He  has  given  Jones  a  note  for  $1000  and 
his  farm  is  mortgaged  to  the  extent  of  $3000. 

(6)  Jones  owns  goods  in  a  dry  goods  store  worth  $25,000; 
house  and  lot,  $10,000;  automobile,  $2000;  bank 
shares  ("  stock "),  $4000;  Smith's  note,  $1000. 
He  owes  Brown,  as  per  note,  $2000;  has  overdrawn 
his  bank  account  to  the  extent  of  $5000;  and  his 
house  and  lot  are  under  mortgage  for  $2000. 

(c)  Brown  owns  a  stable  worth  $5000;  horses,  $10,000; 
carriages,  etc.,  $15,000;  furniture,  $2000;  Jones' 
note,  $2000;  stock  in  a  trolley  line,  $3000;  bank 
deposit,  $5000.  He  owes  Smith,  as  per  note,  $500, 
and  his  stable  is  mortgaged  for  $1000. 

Ch.  III.     §  8 
Suppose  A's  balance  sheet  is  as  follows: 

Assets  Liabilities 

Tangible  goods. . . .  $10,000        Debts  due  B $5000 

Shares  in  U.  S.  Steel 

Corporation 10,000  

$20,000  $5000 

Capital  Balance.  . .  $15,000 


9          SUGGESTED  PROBLEMS  FOR  TEACHERS 

Do  those  items  imply  relations  between  A  and  other  persons, 
whether  real  or  fictitious?  If  so,  what  other  persons? 
Make  up  illustrative  accounts  of  these  other  persons. 
If  these  accounts  imply  relationship  with  still  other 
persons,  then  make  up  the  sheets  of  these  also  and  proceed 
until  both  sides  of  every  debt  and  credit  is  represented. 
Then  cancel  by  the  method  of  couples.  Does  any  debt 
and  credit  item  remain  among  the  uncancelled  items? 

Ch.  III.     §  9 

Does  recapitalizing  a  company  at  a  larger  figure  (watering 
its  stock)  add  to  the  wealth  of  the  country? 

Does  the  issue  of  $100,000,000  bank  notes  by  banks,  by 
which  they  stipulate  to  pay  that  sum  on  demand,  add 
$100,000,000  to  the  wealth  of  the  country? 

Ch.  IV.     §  i 

Is  the  money  which  a  wage  earner  has  been  paid  and  which 
he  is  carrying  home  Saturday  night  capital?  Is  it 
income?  Is  it  outgo?  Is  money  ever  income;  outgo? 
What  is  "money-income";  "money-outgo"?  Are 
expenses  outgo?  Are  expenses  money  or  the  parting  with 
money? 

Are  the  apples  on  a  tree  income  or  capital?  Are  the  apples 
which  fall  from  the  tree  income  or  capital?  Is  the  yielding 
of  the  apples  by  the  tree  as  the  apples  fall  to  the  ground 
income  or  capital? 

Ch.  IV.     §  2 

Describe  the  outgo  and  income  of  an  automobile  from  the 
time  it  is  bought  to  the  time  it  is  sold  second-hand, 
using  illustrative  figures  for  each  successive  year. 

Ch.  IV.     §  3 

How  would  these  figures  be  altered  if  the  automobile  were 
paid  for  in  installments  and  when  resold  were  again 
paid  for  in  installments? 


10        SUGGESTED  PROBLEMS  FOR  TEACHERS 

Ch.  IV.    §§  4  and  5 

A  capitalist  receives  dividends  of  $5000  a  year  which  he 
puts,  as  they  come  in,  into  a  strong  box.  Out  of  it,  in 
the  course  of  a  year,  he  takes  $4000  for  food,  clothing, 
etc.,  and  other  living  expenses. 

Is  the  receipt  of  $5000  in  dividends  income,  outgo,  or 
capital?  If  income,  income  from  what?  Is  the  deposit 
of  $5000  in  the  strong  box  income,  outgo,  or  capital? 
If  outgo,  outgo  occasioned  by  what?  Is  the  payment 
of  $4000  out  of  the  box  for  living  income,  outgo,  or 
capital?  If  income,  income  from  what?  If  outgo, 
outgo  occasioned  by  what?  Is  the  use  of  the  food,  clothes, 
house,  etc.,  for  which  the  #4000  is  paid  income,  outgo, 
or  capital?  If  income,  income  from  what?  Are  the 
contents  of  the  strong  box  income,  outgo,  or  capital 
the  food  in  the  pantry;  the  clothes  worn? 

Ch.  V.     §  i 

When  an  apple  falls  from  a  tree  into  the  stock  of  apples  on 
the  ground  beneath;  what  is  the  interaction?  What 
is  the  "  acting  "  (i.  e.,  yielding)  capital?  What  is  the 
capital  acted  on?  How  then  credit  and  debit?  Is 
there  any  net  income  from  the  orchard  as  a  whole? 

Express  the  credits  and  debits  when  money  is  taken  out  of 
one  pocket  and  put  into  another. 

Ch.  V.     §  2 

When  water  is  pumped  into  a  tank  what  is  the  interaction? 
What  capital  is  credited?  What  debited?  When  coal 
is  screened;  when  wheat  is  reaped;  when  potatoes  are 
dug;  when  fish  are  caught? 

Ch.  V.    §  3 

Into  how  many  stages  may  we  divide  the  transportation 
of  coal  from  one  city  to  another?  At  each  stage  indicate 
the  credits  and  debits  involved. 


II         SUGGESTED  PROBLEMS  FOR  TEACHERS 

Trace  the  interactions — of  transfer,  transformation,  trans- 
portation— connected  directly  with  some  article  of  your 
breakfast  table,  such  as  sugar,  coffee,  meat,  eggs,  etc., 
following  it  from  the  original  processes  of  production  to 
its  final  consumption. 

Ch.  V.     §  4 

A  man  enters  a  store,  asks  for  a  dollar's  worth  of  sugar, 
and  is  handed  a  package.  Thereupon  he  hands  it  back 
saying,  "  I'll  change  my  mind;  give  me  a  dollar's  worth 
of  tea  instead."  Receiving  the  tea,  he  starts  to  go  out 
of  the  store.  The  storekeeper  calls  him  back,  saying, 
"You  didn't  pay  for  the  tea."  "Oh!  yes  I  did,"  he 
replies,  "  I  gave  you  back  the  sugar."  "  But,"  persists 
the  storekeeper,  "  you  didn't  pay  for  the  sugar."  "  No," 
replies  the  man,  "  but  I  didn't  take  the  sugar!  "  Explain 
this  "  flim  flam  "  in  terms  of  the  debits  and  credits 
involved. 

Ch.  V.    §  5 

An  exchange  consists  in  four  items  in  all,  two  of  which  are 
debits  and  two  of  which  are  credits.  Show  these  four 
items  when  A  buys  $10  worth  of  wheat  from  B  for  a  note? 
On  account? 

A  paper  "  trust  "  owns  great  forest  lands;  cuts  its  timber; 
floats  the  logs  to  pulp  mills;  and  turns  them  into  pulp 
and  the  pulp  into  paper.  Draw  up  a  table  showing  the 
chief  interactions. 

Ch.  V.     §  6 

Copy  table  on  page  86  in  the  center  of  a  large  sheet  and 
insert  other  items  in  the  "outgo  "  column,  such  as  pay- 
ment of  wages,  rent,  interest,  etc.,  and  introduce  the  other 
sides  of  the  interactions  thus  introduced  and  the  other 
capital  items  to  which  they  relate.  For  this  purpose 
make  other  tables  on  either  side  of  the  original.  Then 


12        SUGGESTED  PROBLEMS  FOR  TEACHERS 

make  the  cancellations  of  interactions  by  drawing  a 
line  through  each  pair  of  mutually  cancelling  items  and 
note  what  items  are  left. 

Ch.  V.     §  7 

We  have  seen  that  it  is  not  correct  to  infer  that  in  every 
trade  the  one  who  parts  with  the  money  is  a  loser  and 
only  the  one  who  receives  it  a  gainer.  Is  it  correct  to 
conclude  that  neither  party  gains,  since  each  receives  and 
parts  with  equal  values  which  cancel  themselves  out? 
If  not,  is  it  nevertheless  correct  to  cancel  those  values 
against  each  other? 

Suppose  the  government  should  compel  every  mortgage 
to  be  paid  off  at  once.  Make  a  table  showing  how  the 
balance  sheets  of  the  mortgagor  and  the  mortgagee  would 
be  affected.  Would  this  compulsion  bring  hardship? 
Would  it  affect  the  wealth  of  the  community?  How? 

Suppose  the  government  should  compel  all  booksellers  to 
stop  business.  Make  income  and  outgo  accounts  to 
illustrate  the  contrast  between  what  would  have  been 
without  such  interference  and  what  will  happen  with  such 
interference.  Would  this  compulsion  bring  hardship? 
Would  it  affect  the  income  of  the  community?  How? 

Ch.  V.     §  8 

Add  to  the  account  in  §  8  of  the  dry  goods  company  other 
items  to  include  rent  paid  for  hired  premises,  use  of 
one's  own  premises,  payment  of  interest,  wages,  etc. 
[See  Nature  of  Capital  and  Income,  p.  160,  etc.] 

Ch.  V.     §  9 

Add  to  the  table  in  §  9  the  items  which  would  be  involved 
if  we  consider  "  food  "  as  producing  an  interaction  on 
"  self  "  (in  the  consumption  of  food)  and  "  self  "  yielding 
the  thus  resulting  satisfactions.  [See  Nature  of  Capital 
and  Income,  p.  174,  ff.] 


13        SUGGESTED  PROBLEMS  FOR  TEACHERS 

Ch.  V.     §10 

Is  dancing  labor?  Is  the  dancing  of  a  dancing-master 
labor?  If  he  "  would  rather  dance  than  eat,"  is  it 
labor?  (F.) 

Ch.  VI.     §  i 

Suppose  a  loan  of  $100  at  5%  for  ten  years.  Show  how 
this  loan  might  be  expressed  in  terms  of  a  number  of 
separate  contracts  by  which  a  perpetual  annuity  is 
bought  and  sold.  Show  how  it  may  be  expressed  in 
terms  of  ten  year-to-year  contracts  by  which  a  sum  of 
money  in  one  year  is  exchanged  for  another  sum  the  next 
year. 

Ch.  VI.     §  2 

What  is  the  amount  o[  $3.00  at  3%  for  3  years? 

Assuming  the  same  rate  of  interest,  what  is  the  present 
worth  of  $200  due  in  two  years? 

Ch.  VI.     §  3 

Suppose  the  sum  of  $52  is  due  in  1920.  Compute  its 
"  present  value  "  in  1919  if  the  rate  of  interest  is  4%; 
if  the  rate  is  6%;  if  3%.  Compute  its  "  present  value  " 
in  1918  at  4%;  at  6%;  at  3%.  Compute  its  "  present 
value  "  in  1917  at  4%;  at  6%;  at  3%. 

Draw  a  "  discount  curve  "  representing  the  above  three 
results.  Which  curve  is  the  steepest? 

Ch.  VI.     §  4 

A  $1000  "  three  per  cent  "  bond  falls  due  in  two  years. 

What  is  its  present  value  if  the  actual  rate  of  interest  is 

3%;if6%? 
Draw  the  tooth-like  curves  for  the  above  two  cases. 

Ch.  VI.     §  5 

Verify  by  computation  the  values  given  in  the  last  two 
columns  of  page  125  for  the  "  land  "  and  "  the  suit  of 


14        SUGGESTED  PROBLEMS  FOR  TEACHERS 

clothes  "  and  "  the  loaf  of  bread."  Carry  out  the  cal- 
culation for  "  the  suit  of  clothes  "  more  exactly  than  is 
given  in  the  book. 

Indicate  by  arithmetical  formulae  the  method  of  working 
out  the  same  results  for  the  "  house  "  and  the  "  horse.' 

Calculate  all  the  values  in  the  last  two  columns  if  the  rate 
of  interest  is  zero. 

Ch.  VII.     §  i 

What  is  the  value  of  a  property  which  yields  $100  the  first 

year,  #200  the  second,  and  $300  the  third  (and  nothing 

more),  if  interest  is  5%? 
What  is  its  value  at  the  end  of  the  first  year  just  before  the 

#100  is  received?     Just  after? 
What  is  its  value  at  the  end  of  the  second  year  before  and 

after  the  #200  is  received?     The  third  year  in  both  cases? 
Make  a  table  showing  the  complete  history  of  its  value,  its 

appreciation  or  depreciation,  and  the  interest  accrued 

each  year. 

Ch.  VII.     §  2 

Express,  by  means  of  formulae,  the  process  of  deriving  all 
of  the  figures  in  the  table  on  page  130  and  work  it  out 
in  detail  for  the  "  suit  of  clothes." 

Given  interest  at  5%  and  given  an  income  of  #i,  #10,  #100 
due  respectively  I  year,  2  years,  and  3  years  from  date, 
work  out  the  history  of  the  capital  value  from  the  present 
time  onward  and  show  each  year  what  is  "  interest 
accrued,"  "  appreciation  "  or  "  depreciation,"  and  "  rate 
of  income  taken  out." 

Take  as  your  example  a  loaf  of  bread  and  fill  out  columns 
of  table  on  page  130. 

Ch.  VII.     §  3 

The  savings  of  the  people  of  the  United  States  are  nearly  a 
billion  dollars  a  year.  What  and  where  are  they?  (F.) 


15         SUGGESTED  PROBLEMS  FOR  TEACHERS 

"  The  old-fashioned  notion  that  capital  is  built  out  of 
savings  has  little  or  no  application  under  our  regime  of 
corporate  organization.  What  happens  nowadays  is 
that  the  corporation  simply  puts  some  portion  of  its 
huge  earnings  into  improvements  such  as  buildings, 
machinery,  side-tracks,  etc.,  so  that  saving  is  no  longer 
required." 

(a)  Show  that  the  modern  method  as  expressed  in  the 
second    sentence   involves   no   essential    change   in 
procedure. 

(b)  Show    that    this    modern    procedure    may    involve. 

probably  does  involve,   not  a  few  cases  of  really 
onerous  saving.     (7\) 

Ch.  VII.     §  4 

Assuming  a  rate  of  interest  of  five  per  cent,  find  what 
annual  income  in  perpetuity  is  the  equivalent  of  the 
following : 

(1)  An  immediate  payment  of  $200. 

(2)  A  payment  of  $20  a  year  for  ten  years  and  then  $400. 

(3)  A  payment  of  $1050  one  year  hence. 

(4)  A  payment  of  $300  one  hear  hence. 

(5)  A  payment  of  $300  two  years  hence. 

(6)  A  payment  of  $5  a  year  for  ten  years  and  then  $102. 

(7)  A  payment  of  $5  a  year  for  ten  years  and  then  $98. 

(8)  A  payment  of  $50  a  year  for  three  years. 

(9)  A  payment  in  four  successive  years  of  $5,  $10,  $8,  $3. 

Ch.  VII.     §  5 

A  man  insures  his  life  for  $1000  for  a  premium  of  $20  a 
year.  Describe  the  asset  and  liability  thus  created  for 
the  insurance  company.  Will  they  be  equal  to  each 
other?  What  two  reasons  why  the  liability  is  not 
appraised  at  $1000.  We  may  assume  that  the  rise  of 
death  increases  each  year  while  the  premium  remains 


1 6        SUGGESTED  PROBLEMS  FOR  TEACHERS 

at  $20,  so  that  the  $20  at  first  more  than  covers  the 
risk.  Show  what  happens,  as  a  consequence,  to  the 
relative  value  of  the  asset  and  liability  as  time  goes  on. 

Ch.  VIII.    §  2 

If  a  gold  dollar  be  melted,  is  it  still  money?  Do  you  know 
of  any  times  and  places  in  which  uncoined  gold  was 
money?  Is  a  postage  stamp  money?  Is  a  street  railway 
coupon,  good  for  a  five  cent  ride,  money?  Is  the  ware- 
house receipt  for  #100,000  deposited  in  the  vaults  of  a 
safety  deposit  company  money?  Is  the  "gold  certifi- 
cate "  of  the  United  States  Government  (which  is 
simply  a  warehouse  receipt  for  gold  coin  deposited  in 
the  vaults  of  the  United  States)  money?  Strictly  speak- 
ing, is  it  the  written  certificate  or  the  right  it  represents 
which  is  money?  Is  an  old  Roman  coin  still  money? 

What  objections  would  you  see  in  the  use  of  any  of  the 
following  as  money:  wheat,  diamonds,  sulphur,  iron, 
ivory,  ostrich  plumes,  lead? 

Ch.  VIII.    §  3 

In  the  example  given  in  the  text,  suppose  that  the  volume 
of  money  doubles  while  its  velocity  and  the  quantities 
of  goods  exchanged  remain  unchanged,  but  that,  through 
some  special  cause,  the  price  of  bread  is  prevented  from 
rising  while  the  price  of  coal  doubles;  show  what  must 
happen  to  the  price  of  cloth. 

In  the  same  example,  suppose  that  the  volume  of  money  is 
doubled  and  the  velocity  of  circulation  increased  by 
50%,  while  the  quantities  of  goods  exchanged  remain 
unchanged;  show  what  will  happen  to  the  price  level. 

In  the  same  example,  suppose  that  the  quantity  of  money 
increased  25%,  its  velocity  20%  and  the  volume  of  trade 
50%;  what  will  happen  to  prices? 

From  the  equation  of  exchange,  show  how  to  express  the 
price  level;  i.  e.,  P  =  ? 


17         SUGGESTED  PROBLEMS  FOR  TEACHERS 

Ch.  VIII.     §  5 
Express  in  algebriac  formulae  P  as  an  average  of  the  p's 

and  T  as  the  sum  of  the  <2's.     What  kind  of  an  average 

is  P? 
Suppose  that  in  the  year  1900  the  prices  of  various  goods 

are  po,  po',  p^1 ',  .  .  .  and  the  quantities  Qo,  (?</,  (?o",  •  •  • 

respectively;  and  that,  in  the  year  1912,  the  prices  and 

quantities  are  fc,  fc'f  fc",  ...  and  Qlt  &',  Qi",  .  .  . 

Let  the  price  level  (P0)  for  1900  be  called  100%  or  i. 

Write 

(1)  the  formula  for  TO,  the  volume  of  trade  for  1900. 

(2)  the  formula  for  7\,  the  volume  of  trade  for  1912,  as 
the  total  value  which  the  quantities  for  1912  would 
have  at  the  prices  of  1900. 

(3)  the  formula  for  PI,  the  price  level  for  1912. 

[See  Purchasing  Power  of  Money,  Ch.  X  and  Ap- 
pendix.] 

Ch.  IX.     §  i 

Suppose  one  depositor  who  owes  another  $5000  gives  him 
a  note  for  $5000  and  the  recipient  sells  the  note  to  the 
bank  for  money.  What  is  the  effect  on  the  balance 
sheet  on  page  171?  If,  instead  of  taking  cash  for  the 
note,  he  accepts  a  credit  of  $5000,  against  which  he  can 
draw  at  will,  what  will  be  the  effect  on  the  balance  sheet? 

Ch.  IX.     §  2 

Have  the  above  operations  increased  the  world's  wealth 
by  $5000?  Have  they  increased  the  world's  currency? 

Ch.  IX.     §4 

Not  many  years  ago  it  was  estimated  that  the  per  capita 
money  circulation  of  England  was  about  $11  while  that 
of  France  was  about  $51 ;  yet  there  was  at  least  as  much 
business  per  capita  carried  on  in  England  as  in  France. 
How  could  the  difference  in  the  amounts  of  circulating 
medium  be  explained?  (T.) 


1 8        SUGGESTED  PROBLEMS  FOR  TEACHERS 

In  the  United  States  in  1909  M  was  about  if  billions  of 
dollars;  M',  6f  billions;  V,  21  times  a  year;  V,  54. 
Calculate  (i)  the  total  money  expended;  (2)  the  total 
checks  drawn  against  deposits ;  (3)  the  grand  total  of  ex- 
penditures. What  then  was  the  total  value  of  the  goods 
bought? 

Assume  as  our  unit  for  measuring  the  volume  of  trade  ( T) , 
the  quantity  of  goods  worth  a  dollar  in  ipop.  What  is  the 
price  of  each  kind  of  goods?  What  is  the  average  price 
(P)  ?  What  is  the  total  number  of  "  units  "  in  the  volume 
of  trade  (D? 

In  1911  M  was  about  13  billions;  M',  8  billions;  V,  21; 
V  50;  while  T  had  increased  7%.  What,  then,  was  T 
in  1911.  What  was  P?  How  much  has  P  changed 
since  1909?  On  the  basis  of  the  above  figures  how  do 
you  explain  this  change  in  the  price  level? 

Ch.  IX.     §  5 

Suppose  that  in  a  given  community  in  the  course  of  time 
(by  a  change  in  banking  laws,  or  otherwise)  the  average 
ratio  of  reserves  to  deposits  subject  to  check  should  be 
changed  from  20%  to  10%.  Show  the  effect  on  the 
quantity  of  money  in  circulation,  on  the  volume  of 
deposits  and  on  the  price  level.  Assume  that  the  ratio 
of  money  in  circulation  to  deposits  subject  to  check 
remains  I  to  5. 

Solve  the  problem  again,  assuming  that  the  ratio  of  money 
to  deposits  does  not  remain  constant,  but  changes  from 
a  ratio  of  I  to  5  to  a  ratio  of  I  to  7. 

Ch.  X.     §  2 

It  is  shown  in  the  book  that  the  lender  loses  by  depreciation. 
Would  he  not  also  lose  if  instead  of  "  lending  his  money," 
he  should  "  keep  his  money  "?  Show  the  money  fallacy 
lurking  in  these  phrases  by  distinguishing  between  keeping 


19        SUGGESTED  PROBLEMS  FOR  TEACHERS 

actual  money  and  "  keeping  money  invested  "  in  land, 
factories,  and  other  wealth.  Show  the  difference  between 
"  keeping  his  money  invested  "  in  stocks  and  keeping  it 
invested  in  bonds. 

Ch.  XI. 

Suppose  the  trade  unions  in  the  building  trades  should 
force  up  the  prices  of  all  building  materials,  buildings, 
and  labor  in  these  industries;  would  they  have  any  in- 
fluence on  M,  M',  V,  V,  or  T?  If  not,  could  their 
action  have  any  effect  on  P?  If  not,  what  must  be  the 
effect  on  other  prices  than  those  which  they  raise? 

Suppose  the  steel  trust  raises  the  price  of  steel.  Will  this 
necessarily  raise  the  general  level  of  prices?  Explain. 

In  what  ways  is  it  possible  that  the  general  level  of  prices 
may  be  raised  by  the  steel  trust? 

Does  failure  of  the  wheat  crop  tend  to  raise  the  price  of 
wheat?  Does  it  tend  to  raise  the  price  level?  If  so, 
in  what  way?  What,  if  any,  connection  is  there  between 
the  influence  of  the  crop  failure  on  the  price  of  wheat  and 
its  influence  on  the  price  level? 

What  effect  does  an  increase  in  middlemen  have  on  the 
prices  paid  by  the  consumer;  on  the  prices  received  by 
the  producer;  on  the  general  level  of  prices? 

What  do  you  think  are  the  chief  effects  on  prices  of  shorten- 
ing the  hours  of  labor? 

Trace  the  effects  on  the  price  level  of 

(1)  The    accruing    of  a  surplus    in  the  United  States 
Treasury. 

(2)  A  deficit  in  the  same. 

(3)  The  admission  of  new  stocks  (i.  e.,  of  new  corpora- 
tions) to  the  stock  exchange. 

(4)  Increase  in  the  leisure  classes. 

(5)  "  High  living." 

(6)  Extension  of  market. 

(7)  Immigration  of  the  Jews. 


2O         SUGGESTED  PROBLEMS  FOR  TEACHERS 

(8)  Exhaustion  of  productivity  of  the  soil  by  unscientific 

farming. 

(9)  Abolition  of  truck  system  of  paying  employees. 
(10)  The  "  Black  Death,"  1348-51. 

(n)  Invention  of  the  telegraph. 

(12)  Practice  of  paying  money  by  telegraph. 

(13)  Development  of  business  accounting. 

Ch.  XII.     §  i 

If,  instead  of  duties  on  imports  into  the  United  States,  there 
should  be  laid  duties  on  exports,  show  what  would  be 
the  effect  on  the  level  of  prices  in  the  United  States? 

If  duties  were  laid  on  both  imports  and  exports  so  that  the 
net  effect  on  M  were  nil,  what  would  be  the  effect  on  P? 

Suppose  that  we  had  a  depreciated  and  irredeemable  cur- 
rency so  that  no  money  would  be  either  imported  or 
exported;  what  then  would  be  the  effect  of  a  protective 
tariff  on  the  general  price  level?  On  the  prices  of  im- 
ported articles?  On  the  prices  of  other  articles? 

Ch.  XII.     §  2 

If  a  "  seigniorage  "  were  reestablished  at  the  mint,  what 
would  be  its  effect  on  the  price  level  and  why? 

If  the  governments  should  limit  the  coinage  of  gold,  what 
would  be  the  effect  on  the  price  level  and  why? 

Ch.  XII.     §  3 

If  governments  should  control  the  gold  mines  and  reduce 
their  output,  what  would  be  the  effect  on  the  price  level 
and  why? 

Ch.  XII.     §  4 

If  gold  were  demonetized,  would  it  retain  its  full  former 
value  as  bullion?  Show  mechanically  what  would 
happen. 


21        SUGGESTED  PROBLEMS  FOR  TEACHERS 

Ch.  XIII.     §  5 

Suppose,  under  bimetallism,  that  gold  became  exhausted 
while  new  discoveries  of  silver  were  made.  Discuss  the 
effect  on  the  stability  of  bimetallism  and  on  the  purchas- 
ing power  of  money. 

Discuss  these  effects  when  new  discoveries  of  both  metals 
are  simultaneously  made. 

Ch.  XIII.     §  6 

It  is  said  that  during  the  Civil  War  money  was  abundant 
and  yet  gold  was  very  dear.  Would  the  expulsion  of 
gold  by  the  greenbacks  tend  to  cheapen  gold  ?  Reconcile 
your  answer  with  the  "  dearness  "  of  gold. 

Given  the  limping  standard  and  falling  prices  (i.  e.,  an 
increase  in  the  purchasing  power  of  money,  i.  e.,  a  falling 
level  of  the  surface  of  the  contents  of  the  money  reser- 
voirs) how  could  the  government,  by  exercising  its 
discretion  in  coining  silver,  tend  to  arrest  the  movement? 
If  it  should  continue  to  pursue  this  policy  in  the  face  of  a 
continued  fall  of  prices,  what  would  ultimately  happen 
to  the  amount  of  gold  in  circulation?  What  monetary 
system  would  result?  Would  the  regulation  of  the 
purchasing  power  of  money  so  as  to  prevent  or  mitigate 
its  changes  be  economically  desirable.  Would  it  be 
politically  desirable  to  allow  an  official  to  exercise  dis- 
cretion in  buying  and  coining  silver. 

Suppose  prices  to  be  rising.  In  what  ways  could  the  cur- 
rency be  contracted?  Discuss  their  desirability. 

Ch.  XIV.    §  3 

Write  the  formula  for  the  simple  arithmetical  average  of 

7  and  8. 
Write  the  formula  for  the  weighted  arithmetical  average 

of  7  and  8  when  the  weights  are  2  and  3. 
The  simple  geometrical  average? 


22        SUGGESTED  PROBLEMS  FOR  TEACHE.RS 

The  weighted  geometrical  average? 

The  simple  harmonic  average? 

The  weighted  harmonic  average? 

Answer  the  same  questions  when  the  numbers  to  be  averaged 
are  a  and  b  and  their  weights  A  and  B.  Suppose  three 
numbers;  four. 

The  median  of  any  given  series  of  numbers  is  the  middle 
number,  i.  e.,  a  number  such  that  half  of  the  given 
numbers  are  greater  and  half  smaller.  If  the  series 
contains  an  even  number  of  numbers  and  the  two  middle 
ones  are  not  equal  to  each  other,  the  median  is  usually 
taken  as  their  arithmetical  mean. 

With  these  definitions,  find  the  simple  averages,  arithmetical, 
geometrical,  harmonic  and  median,  of  I  and  2.  Find 
the  weighted  averages  when  the  weights  are  3  and  4. 
Work  but  the  same  problems  when  the  numbers  are  7,  8, 
9,  the  weights  being  I,  2,  3. 

Suppose  bread,  coal  and  cloth  have  the  price  ratio  given  on 
page  251  (bottom)  in  1909  and  1912,  but  that  the  quan- 
tities exchanged  were  the  same  in  both  years,  say  20, 
50  and  30.  Show  that  a  properly  weighted  arithmetical 
average  of  the  index  numbers  for  1912  will  give  exactly 
the  same  value  of  PT  for  1912  as  2PQ.  Show  that 
none  of  the  other  averages  mentioned  (geometrical,  etc.) 
would  do  this. 

What  kind  of  average  would  you  take  for  the  "  average 
velocity  of  circulation  of  money  for  the  United  States  "  if 
one  billion  dollars  turn  over  25  times  in  the  Eastern  States ; 
a  half  billion  in  the  Western  States,  20  times;  and  a 
sixth  of  a  billion  in  the  Southern  States,  10  times.  Show 
what  the  time  of  turnover  is  in  the  three  districts  and  the 
average  time  of  turnover  for  the  United  States.  [The 
proper  average  velocity  is  a  weighted  arithmetical  average 
and  the  proper  average  time  is  a  weighted  harmonic 
average.] 


23         SUGGESTED  PROBLEMS  FOR  TEACHERS 

Ch.  XIV. 
GENERAL  REVIEW  PROBLEMS  ON  MONEY  FALLACIES 

11  I  don't  see  that  society  as  a  whole  loses  anything  by  the 
giving  of  a  fireworks  exhibition  costing  $1000.  Of  course 
the  people  who  pay  for  the  fireworks  are  just  so  much 
out.  But  then  the  $1000  goes  to  the  other  people  who 
furnish  the  fireworks;  so  that  society  as  a  whole  comes 
out  even."  Criticise.  (T.) 

11  My  numerous  armies  promote  the  circulation  of  money, 
and  disburse  impartially  among  the  provinces  the  taxes 
paid  by  the  people  of  the  state."  Frederick  the  Great 
justifying  his  wars  in  a  letter  to  D'Alembert.  (Quoted 
from  Bullock.) 

Was  there  anything  in  the  facts  stated  to  offset  the 
sacrifices  undergone  by  the  people  in  paying  the  taxes? 

(r.) 

A  Western  newspaper,  anxious  to  hinder  the  people  of  the 
community  from  buying  outside,  represents  a  silver 
dollar  as  appealing  to  a  home  dentist  about  to  send  it 
to  Montgomery  Ward  &  Co.  of  Chicago,  in  the  following 
strain : 

"  Now  look  here,  Doc.     If  you'll  only  let  me  stay  in  this 

town,  I'll  circulate  around  and  do  you  lots  of  good. 

You  buy  a  big  beefsteak  with  me,  and  the  butcher 

will  buy  groceries,  and  the  grocer  will  buy  dry  goods, 

and  the  dry  goods  merchant  will  pay  his  doctor  bill 

with  me,  and  the  doctor  will  spend  me  with  a  farmer 

for  oats  to  feed  his  buggy  horse,  and  the  farmer  will 

buy  fresh  beef  from  the  butcher  and  the  butcher  will 

come  around  to  you  and  get  his  tooth  mended.     In 

the  long  run,  you  see,  I  will  be  more  useful  to  you  here 

at  home  than  if  you  send  me  away  forever." 

(a)   Clear  up  the  fundamental  errors  in  all  talk  of  this  kind. 

(6)  Show,  even  if  we  admit  the  principle  implied  in  the 

quotation  (that  only  the  money  spent  at  home  can 


24        SUGGESTED  PROBLEMS  FOR  TEACHERS 

complete  the  circuit  so  as  to  get  back  to  the  original 
spender),  only  a  very  small  portion  of  the  dollar 
could  get  back  to  the  dentist.  (T.) 

"  It  is  sometimes  asked  whether  the  raising  of  a  government 
loan  to  cover  ordinary  expenditures  really  causes  capital 
to  be  lost,  since  the  coins  received  by  the  government 
remain  in  existence, — even  remain  in  the  country.  This 
objection  has  no  weight  whatever.11  Pierson's  Principles  of 
Economics. 
Show  that  the  statement  in  italics  is  correct.  (7\) 

The  government  of  the  island  of  Guernsey  having  no  ready 
funds  issued  paper-notes  to  pay  for  the  building  of  a 
market.  They  circulated  and  were  gradually  taken  up 
as  the  market  earned  its  cost,  during  ten  years.  When 
they  were  all  redeemed  and  burned  the  island  had  the 
market.  Was  it  free  of  cost?  Explain  the  nature  of 
the  transactions  involved.  {F.) 

"  A  wise  government  will  never  let  a  dollar  in  money  go 
out  of  the  country;  for,  as  every  dollar  spent  by  an  in- 
dividual makes  him  so  much  poorer,  so  every  dollar 
paid  out  by  the  country  to  other  countries  makes  the 
first  country  so  much  the  poorer." 

(a)  In  what  sense  must  the  word  "  spent  "  be  understood 
to  make  the  case  of  the  individual  and  the  country 
parallel? 

(b)  When  used  in  this  sense,  is  it  true  that  every  dollar 

spent  by  the  individual  makes  him  so  much  poorer? 
(T.) 

From  a  Salt  Lake  supporter  of  the  "  Seeing  America  " 
movement:  "  We  recognize  that  Americans  are  annually 
spending  $200,000,000  in  foreign  travel.  That  practi- 
cally every  dollar  of  this  vast  sum  is  lost  to  the  home 
circulation  cannot  be  disputed." 
Criticise  the  last  sentence.  (T.) 

"  We  pay  no  million  dollars  per  annum  for  the  carrying  of 
products  between  this  and  foreign  countries.  Think 


25        SUGGESTED  PROBLEMS  FOR  TEACHERS 

of  it.  One  hundred  and  ten  million  "dollars  in  gold  coin 
has  gone  out  of  the  commerce  of  this  country  into  the 
commerce  of  other  countries.  Can  New  York  stand 
this?"  James  G.  Elaine  in  1881. 

(a)  Is  it  likely  that  we  permanently  lost   no  million 
dollars  in  gold  from  our  circulation  because  we  hired 
foreigners  to  carry  our  goods? 

(b)  Is  it  likely  that  we  even  temporarily  parted  with  that 
much  gold  on  that  account? 

(c)  Is  it  likely  that  as  a  nation  we  should  have  been  richer 
if  we  had  done  this  carrying  of  products  for  ourselves? 
(T.) 

"  The  annual  influx  of  students  and  other  outsiders  into 
the  fruit  belt  to  engage  in  fruit  picking  and  packing  is 
an  abuse  which  should  be  stopped  at  once.  These 
people  consume  very  little,  saving  their  money  to  take 
back  to  Chicago  and  the  other  places  from  which  they 
came.  Thus,  while  making  large  sums  off  us,  they  give 
little  or  nothing  to  the  support  of  our  industries." 
Criticise.  (TV) 

Ch.  XV.     §  2 

Why  is  it  that  the  same  kind  of  shares  may  be  sold  si- 
multaneously on  the  same  stock  exchange  at  different 
prices?  Could  these  different  prices  be  widely  different? 
Could  they  be  permanently  different?  Why? 

Ch.  XV.     §  3 

Are  supply  and  stock  on  hand  the  same?  Does  stock 
include  the  portion  in  the  hands  of  consumers?  Does 
supply?  Can  stock  ever  exceed  supply.  Can  supply 
ever  exceed  stock?  Does  it  in  the  case  of  sales  for  future 
delivery?  (0.) 

Suppose  that,  as  regards  a  certain  kind  of  rare  coin,  A 
would  buy  one  at  #100;  B,  one  at  #90;  C  and  D,  one  each 
at  $80;  E,  F,  and  G,  one  each  at  $60.  If,  now,  seven  are 


26        SUGGESTED  PROBLEMS  FOR  TEACHERS 

to  be  disposed  of  in  a  competitive  market,  what  will  the 
price  be?     Does  cost  of  production  affect  the  situation? 
(0.) 
Frame  a  demand  schedule  for  salt  and  for  diamonds. 

Ch.  XV.     §  5 

Draw  and  discuss  supply  and  demand  curves  in  which 
(a)  The  demand  is  elastic  and  the  supply,  elastic; 
(6)  The  demand  is  elastic  and  the  supply,  inelastic; 

(c)  The  demand  is  inelastic  and  the  supply,  elastic ; 

(d)  The  demand  is  inelastic  and  the  supply,  inelastic ; 
by  supposing  (i)  the  demand  curve  and  (2)  the  supply 

curve  to  shift. 

Ch.  XVI.    §  i 

Continue  the  curves  in  Fig.  30  for  higher  prices  up  to  $12 
as  given  in  the  schedule  above  it.  Continue  them  still 
further  by  supposing  figures  in  the  schedule  for  prices 
higher  than  $12.  Continue  them,  at  the  other  ends,  by 
supposing  figures  in  the  schedule  for  prices  lower  than 
$2,  down  to  zero.  What  is  meant  by  demand  at  a  zero 
price?  Suppose  prices  below  zero  and  extend  the  schedule 
and  curves  for  such  prices.  What  is  meant  by  demand  at 
such  negative  prices? 

Ch.  XVI.     §  2 

Draw  up  a  list  of  reasons  why  one  person's  subjective  esti- 
mate of  a  good  may  vary  from  that  of  another  person. 
(0.) 

Ch.  XVI.     §  5 

Taking  the  schedule  in  the  book  and  assuming  that  the 
market  price  of  coal  is  $5  per  ton,  compare  the  marginal 
desirabilities  of  coal  to  the  two  persons.  Do  the  same 
for  a  price  of  $4  per  ton;  $6. 


27         SUGGESTED  PROBLEMS  FOR  TEACHERS 

Rewrite  the  price  schedules  on  pages  289  and  290,  taking 
as  the  unit  of  desirability  the  desirability  of  a  dollar  to 
No.  II.  Which  columns  in  the  two  tables  will  remain 
unchanged?  Rewrite  the  schedules,  taking  as  the  unit 
of  desirability  the  desirability  of  the  third  ton  to  No.  I 
(and  also  of  course  to  No.  II,  since  the  two  are  assumed 
to  have  equal  desirabilities  of  coal).  Frame  a  different 
schedule  for  No.  II,  assuming  that  his  desire  for  coal, 
instead  of  being  always  equal  to  that  of  No.  I  (for  the 
same  quantity) ,  is  always  twice  as  intense  (but  still 
assuming  that  his  desire  for  a  dollar  is  twice  that  of 
No.  I).  Note  the  resulting  similarity  in  the  demand 
schedule.  Explain. 

Ch.  XVI.     §  7 

We  know  that,  although  practically  all  men  desire  larger 
incomes  than  they  have,  some  are  more  easily  satisfied 
than  others.  Contrast  the  curves  indicating  their 
marginal  desirabilities  of  money.  Which  will  descend 
fastest?  Suppose  a  curve  of  marginal  desirability  of 
money  should  meet  the  horizontal  or  X  axis ;  what  would 
this  mean?  Suppose  a  man  to  have  desire  only  for 
necessary  food,  clothing  and  shelter  and  little  desire  for 
luxuries.  What  sort  of  a  curve  of  marginal  desirability 
of  money  would  he  have?  The  curve  of  marginal  de- 
sirability of  money  above  considered  expresses  the 
relation  between  the  money  value  of  one's  income  and 
his  marginal  desirability  of  money.  Could  you  draw  a 
curve  to  indicate  the  relation  between  the  money  carried 
in  one's  pocket  and  his  marginal  desirability  of  money? 

Would  the  latter  curve  necessarily  be  of  the  same  form  as 
the  former?  Do  either  of  these  curves  represent  the 
relation  between  the  amount  of  money  in  circulation  and 
its  purchasing  power?  In  which  of  these  three  cases  is 
the  purchasing  power  of  money  supposed  to  remain 
constant  and  in  which  to  vary? 


28        SUGGESTED  PROBLEMS  FOR  TEACHERS 

"  I  am  not  convinced  of  the  soundness  of  the  orthodox 
doctrine  that  a  country  can  have  all  the  money  it  wants 
and  needs,  just  as  it  can  have  all  the  engines,  machinery  > 
etc.,  which  it  wants.  Money  is  very  different  from  other 
things.  It  would  be  easy  to  give  a  man  all  the  food  and 
clothes  he  wants;  but,  however  much  money  you  offered 
him,  he  would  take  it  all  gladly." 

Criticise  by  distinguishing  carefully  the  three  relations 
above  mentioned. 


Ch.  XVII.     §  i 

Extend  the  first  schedule  and  curve  of  §  I  in  both  directions 
by  supposing  illustrative  figures. 

Ch.  XVII.     §  2 

Draw   rr'   and,   assuming   a   particular   price,   draw   mm' 

descending  and  find  the  supply  of  the  individual  which 

corresponds  to  that  particular  price,  thus  locating  one 

particular  point  in  the  supply  curve. 
Assuming  another  (say  higher)  price,  reconstruct  the  entire 

figure  and  find   a  second   point  on  the  supply  curve. 

Will  rr'  in  the  second  construction  be  the  same  as  before? 

Will  mm'?     Will  mm'  begin  at  the  same  point  at  the  left? 

Will  it  descend  more  or  less  rapidly? 
Assuming  other  prices,  obtain  the  resulting  supply  curve. 

Ch.  XVII.     §  8 

Suppose  the  fixed  expenses  are  $200,000  a  year;  the  general 
running  expenses,  $100,000  a  year;  and  the  particular 
running  expenses,  $i  per  pair  of  shoes.  What  is  the 
marginal  cost?  What  is  the  average  cost  if  the  output 
is  i  pair;  100;  1000;  10,000;  100,000;  1,000,000?  What 
is  the  total  cost  in  all  these  cases?  What  is  the  total 
cost  if  the  factory  is  idle? 


29         SUGGESTED  PROBLEMS  FOR  TEACHERS 

Revise  the  results  by  assuming,  to  be  closer  to  the  facts  of 
life,  that  the  general  running  expenses  slightly  increase 
with  an  increase  in  output,  while  the  particular  running 
expenses  per  pair  slightly  decrease  with  an  increase  in 
output. 

Ch.  XVII.     §  9 

Illustrate  graphically  "  charging  what  the  traffic  will 
bear  "  by  assuming  a  demand  curve  for  mineral  waters 
and  a  monopolist  owner  of  the  mineral  springs  which 
yield  this  mineral  water.  Assume  first  that  there  is  no 
cost  of  production. 

Show  how  the  results  will  be  modified  if  there  is  a  cost  of 
production,  increasing  or  decreasing. 

Ch.  XVIII.     §  2 

"  If  the  wheat  crop  of  the  world  should  fall  off  one-half 
next  year,  a  rise  in  price  would  then  be  of  great  social 
advantage,  in  fact,  almost  indispensable."  Explain. 

(r.) 

Ch.  XVIII.     §  5 

Would  a  sudden  and  large  increase  in  the  demand  for  beef 
affect  the  supply  of  hides;  of  shoes;  of  harness?  (0.) 

Ch.  XIX.     §  i 

"  The  present  rise  in  the  cost  of  living  cannot  be  due  to  any 
abundance  of  money;  for  such  abundance  would  make 
money  cheap  and  it  is,  as  a  matter  of  fact,  dear."  Criti- 
cise. 

Ch.  XX.     §  2 

"  To-day,  all  over  the  land,  masons,  hod  carriers,  carpenters, 
and  so  on,  are  building  palaces  which  other  people  are 
to  live  in.  When  socialism  triumphs,  all  this  will  be 
changed.  The  worker,  no  longer  robbed  of  the  fruits  of 


30        SUGGESTED  PROBLEMS  FOR  TEACHERS 

his  labor,  will  himself  occupy  the  palaces  he  builds,  wear 
the  broadcloth  he  makes,  and  eat  the  choice  viands  he 
produces." 

(a)  Does  justice  require  that  the  worker  shall  have  the 
right  to  consume  the  particular  object  which  he 
expends  effort  on?     Explain. 

(b)  If  it  did,  would  the  particular  set  of  workers, — masons, 

hod  carriers,  carpenters,  and  so  on, — who  construct 
the  palace,  have  the  exclusive  right  to  enjoy  it? 
Explain. 

(c)  Show  that  others  besides  the  "  workers  "  here  men- 

tioned have  supplied  conditions  necessary  to  the 
existence  of  the  palace.  (T.) 

Ch.  XXI.     §  3 

Suppose  that  it  were  suddenly  announced  to  a  poor  man 
that  he  had  fallen  heir  to  a  large  estate  and  would  come 
into  possession  in  one  year.  What  effect  would  this 
news  have  on  his  degree  of  impatience  for  income;  on 
his  desire  to  borrow? 

Suppose  a  son  who  had  confidentially  expected  a  large 
bequest  from  his  father  discovers  when  the  will  is  read 
that  he  has  been  disinherited.  What  effects  would  this 
news  have  on  his  valuations  of  present  and  future  income? 

If  under  socialism  all  interest  were  forbidden,  what  trans- 
actions would  be  affected?  What  do  you  think  would 
be  the  result? 

Ch.  XXIII.     §  2 

Suppose  all  land  to  be  occupied.  Would  the  rent  of  any 
particular  land  then  necessarily  be  measured  by  its 
excess  in  productivity  over  the  worst  land?  Would 
there  necessarily  be  any  no-rent  land  ?  Are  the  conditions 
in  this  example  ever  or  often  realized  in  practice?  Con- 
sider, as  a  case  very  close  to  that  supposed,  a  fertile 
alluvial  valley  bounded  by  rapidly  ascending  slopes  of 
rapidly  diminishing  fertility. 


31         SUGGESTED  PROBLEMS  FOR  TEACHERS 

"  All  land  is  subject  to  the  law  of  diminishing  returns. 
Consequently  every  increase  in  population  means  that 
the  margin  of  cultivation  has  to  be  pushed  lower,  that  the 
food  of  the  masses  costs  more  than  before,  and  so  the 
amount  of  poverty  ever  increases." 

Objector.  "  Such  talk  is  all  nonsense.  There  is  no  law 
of  diminishing  returns.  It  costs  less  to  raise  a  bushel  of 
wheat  now  than  it  did  a  hundred  years  ago.  The  real 
trouble  is  that  the  existence  of  a  right  of  private  property 
in  land  causes  an  ever  increasing  share  of  the  product  of 
industry  to  go  to  landlords  in  the  shape  of  rent." 

(a)  Explain  the  meaning  of  the  clause:  "  the  margin  of 
cultivation  has  to  be  pushed  lower." 

(b)  Does  the  fact  (supposing  it  to  be  a  fact)  that  "  it 

costs  less  to  raise  a  bushel  of  wheat  now  than  it  did 
a  hundred  years  ago  "  justify  the  sweeping  statement 
that  there  is  no  law  of  diminishing  returns?  Explain. 

(c)  Formulate  a  proposition  which  it  would  justify. 

(d)  If  there  were  no  law  of  diminishing  returns  in  some 
sense  or  other,  could  any  of  the  product  go  to  the 
landlord  as  rent?     Explain. 

(e)  If  the  law  of  diminishing  returns  were  not  true  even 

dynamically,  could  "  an  ever  increasing  share  of  the 
product  of  industry  go  to  landlords  "?  Explain. 

(r.) 

Ch.  XXIV.     §  3 

"  In  1848-49  the  black  death  carried  off  from  one-third 
to  one-half  of  England's  workingmen.  In  consequence 
wages  greatly  advanced." 

(a)  Explain  the  advance  in  wages  on  the  basis  of  the 
Law  of  Supply  and  Demand,  constructing  for  the 
purpose  imaginary  demand  and  supply  schedules. 

(b)  Explain  the  advance  in  wages  on  the  basis  of  Marginal 

Utility  Principle  given  above. 

(c)  Discuss  this  statement :  ' '  Wages  rose  because  the 

demand  for  the  laborers  who  were  left  had  greatly 
increased."  (T.) 


32        SUGGESTED  PROBLEMS  FOR  TEACHERS 

Would  we  naturally  expect  events  like  the  San  Francisco 

earthquake  and  fire  to  increase  the  demand   for  labor 

in  general?     Explain.     (T.) 
"  There  is  just  so  much  work  to  be  done.     The  entrance  of 

women  and  children  into  the  field  of  labor  must  drive 

out  an  equal  amount  of  adult  male  labor." 
Criticise.     (There  are  no  doubt  objections  of  real  weight 

to  the  extension  of  child  and  female  labor;  but  this  is 

not  one  of  them.)     (T.) 
Why  are  opera  singers  so  well  paid?     Spring  poets  so  ill? 

What  is  the  test  or  measure  of  skill?     (D.) 
Under  what  conditions  could  a  ditch  digger  get  higher  wages 

than  a  bookkeeper? 

Ch.  XXIV.     §  4 

Why  not  raise  seals  in  California  and  fruit  in  Alaska?     (F.) 

It  is  often  said  that  the  Irishman  is  a  lazy  and  incapable 

laborer  at  home,   but  fairly,   even  highly,   efficient  in 

America  or  Australia.     Can  you  suggest  some  explanation 

of  this?     (r.) 

Ch.  XXIV.    §  5 

"  George  Rankin  is  of  course  a  big  fool  to  spend  $400  making 
a  mill  dam  in  a  creek  which  is  dried  up  every  summer  and 
never  has  enough  water  to  run  an  ice  cream  freezer;  but 
he  is  doing  one  good  thing, — he  is  making  a  whole  lot 
more  demand  for  labor  and  so  a  lot  more  employment 
for  laborers." 

Explain  fallacy.     (T.) 

Street  comment  on  a  cold  snap  which  bursts  numerous 
water-pipes:  "  Hard  on  householders,  sure  enough;  but 
no  great  loss  without  some  small  gain.  It's  a  bonanza 
for  plumbers." 

Is  that  sound?     (T.) 

"  One  of  the  most  serious  objections  to  the  Chinaman  is 
that,  even  while  he  stays  in  this  country,  he  consumes 


33        SUGGESTED  PROBLEMS  FOR  TEACHERS 

mostly  commodities  which  must  be  imported  from  China; 
so  that  his  wages  go  to  support,  not  American,  but  Chinese 
industries." 

Explain  fallacy.     (T.) 

Remarks  of  a  leading  Congressman  when  it  was  announced 
that  the  Canal  Commission  would  purchase  supplies 
wherever  they  could  be  secured  most  cheaply.  "  The 
President  should  be  able  to  see  the  desirability  of  pur- 
chasing the  supplies  in  this  country  alone,  because  thus 
employment  would  be  given  to  American  capital  and 
labor  instead  of  foreign." 

Explain  fallacy.     (T.) 

The  Chicago  Record- Herald  for  April  18,  1908,  contained 
the  report  of  an  interview  with  the  head  of  one  of  Amer- 
ica's great  universities,  wherein  various  opinions  and 
statements  were  attributed  to  King  Haakon  of  Norway. 
Among  these  was  the  following:  "  I  could  black  my 
own  boots  if  I  wished  to;  I  have  done  it  and  therefore 
know  how ;  but  if  I  did  what  would  become  of  the  people 
who  make  a  living  blacking  boots?  " 

Criticise  on  the  basis  of  Say's  law.     (T.) 

From  Marry att's  Midshipman  Easy: 

11  Yes,  my  dear,  this  is  all  very  well  in  the  abstract,  but  how 
does  it  work?  " 

"  It  works  well.  The  luxury,  the  pampered  state,  the 
idleness, — if  you  please,  the  wickedness  of  the  rich,  all 
contribute  to  the  support,  the  comfort,  and  the  employ- 
ment of  the  poor.  You  may  behold  extravagance, — 
it  is  a  vice ;  but  that  very  extravagance  circulates  money, 
and  the  vice  of  one  contributes  to  the  happiness  of  many." 

Criticise.     ( T.) 

Ch.  XXVI.     §  3 

11  If  all  the  whisky,  brandy,  gin  and  other  alcoholic  drinks 
in  existence  were  taken  out  and  poured  on  the  ground, 
there  would  not  be  one  whit  less  wealth  or  value  in  the 


34        SUGGESTED  PROBLEMS  FOR  TEACHERS 

world  than  before  the  operation."  Is  this  a  correct  use 
of  terms?  If  not,  how  would  you  express  the  same 
thought?  (T.) 

Ch.  XXVI.    §  5 

Do  people  sometimes  buy  a  thing  at  a  high  price  who 
would  refuse  to  buy  at  a  low  price?     Why?     (0.) 

Ch.  XXVI.     §  6 

Do  goods  tend  to  be  less  valuable  when  out  of  style?    Why? 
(0.) 


re 


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SEVENTH 


JAN    4     1935 


LD  21-100m-8,'34 


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rofessor  S.  J. 
piece  in  Eco- 
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well  qualified 

whose  earlier 

THE  RATE 

>mists  living." 

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OF    MONEY 

.     The  author, 

>ry  of  value  are 

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tie  unique  and 
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jurnal,  No.  83, 


table  achieve- 
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ber,  191 1. 


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